The Child Tax Credit Updates for 2021

By
Education & Training with Tax Raj Solutions LLC

By Rajbir Athwal

I represent taxpayers in Boulder, CO and Denver, CO Metropolitan, CO who have issues with unpaid taxes  and outstanding tax liabilities, back taxes and wage garnishments.

 

 

In 2020,  a taxpayer(s) could claim $2,000 of Child tax credit (CTC) for each qualifying dependent child on their tax return at the end of the year.

 

The following are requirements for qualifying child: 

  1. Relationship: child, foster child, step child, siblings younger than you or your spouse if married filing jointly, half siblings and their descendants. 
  2. Age: dependent child must be younger than 17 years at the  tax year.
  3. Live with a tax year in the US for at least 6 months and be claimed as a dependent on your tax return.
  4. They are either US residents or citizens and have valid social security numbers.

The IRS has made number of following updates to child tax credit to help families during pandemic.


 Updates in 2021:

1. Increase in CTC amount in 2021:

  1. Up to $3,000 for each qualifying child between ages 6-17 year.
  2. Up to $3,600 for each qualifying child younger than 6 year.

2. Advance payments of CTC:

  1. Taxpayers can get 50% of CTC as advance payments. That means ($1,500 or $1,800) distributed during the year and the other half at the end of the year.
  2. If you do receive advance payments, you can claim the full amount on your tax return when you file your 2021 tax returns.

3. Non-traditional families:  The grandparents, foster parents, siblings and other relatives caring for sick family members may qualify for credit as well.

4. For Advance CTC: You must have filed your 2020 and 2019 tax returns. If you were not required to file your tax return, you could register at the IRS web site portal similar to the receiving stimulus money.

If you have additional questions regarding recent updates announced in October or other tax related matters, give a call or send me a message at raj@taxrajsolutions.com


Many tax preparers and accounting professionals are extremely busy due to the complexity of tax regulations brought about by the COVID-19 pandemic and the IRS collection efforts to contact taxpayers with unfiled tax returns. If you or somebody else you know are having IRS issues please feel free to contact me at raj@taxrajsolutions.com or call me 301-461-2022. The IRS doesn't like to be ignored. Be proactive.

Enrolled agents are federal tax practitioners licensed by the Treasury Department.

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